Singapore-based Broadcom Ltd is planning to scrap its bid for Qualcomm Inc , after U.S. President Donald Trump blocked the chipmaker's proposed acquisition on national security grounds earlier this week, although it will press on with its plan to move its base to the United States, according to sources familiar with the matter.Broadcom's board was meeting on Tuesday night to formalize its plans and it could make an announcement as soon as Wednesday, the two sources added. The company will also drop its challenge to Qualcomm's board, the people added.Broadcom will continue with its plan to redomicile to the United States, a move that will cost it about $500 million a year under a higher tax rate, the sources added.Being based in the United States as opposed to Singapore will allow Broadcom to make what it believes will be acquisitions of U.S. companies that will not fall within the jurisdiction of the Committee on Foreign Investment in the United States (CFIUS), which scrutinizes deals for potential national security concerns.Broadcom and Qualcomm could not be immediately reached for comment.DEAD DEALTrump signed an order late on Monday to halt what would have been the biggest-ever technology deal on concerns that a takeover of Qualcomm by the Singapore-based company would erode the United States' lead in mobile technology and give China the upper hand.The deal, spearheaded by CEO Hock Tan, would have created the world's No. 3 semiconductor company with a leading market share in smartphones, car electronics and industrial internet devices.Analysts said Broadcom can still build heft through smaller deals. "If Broadcom completes its redomiciling in the U.S. in a way that extinguishes any non-U.S. ownership or control, then I think they can open the door to many, if not all, acquisitions ... they would effectively no longer be subject to a CFIUS-initiated review or investigation," said Guillermo Christensen, a lawyer who works on CFIUS issues at Brown Rudnick in Washington. "But that really hinges on completely severing the foreign ownership connection," he said.

Source: The Star March 14, 2018 02:03 UTC